The fiscal results that Argentina has to obtain in the coming years Within the framework of the agreement reached with the International Monetary Fund (IMF) they leave little margin so that the Government of Javier Milei can fulfill one of its main campaign promises: reduce taxes.
If some private consulting data are addedIt is unimaginable that within a more or less short term, the value added tax (VAT) can be reduced, For example, from 21% to 10.5%, without rising another tribute.
In that sense, a study of Institute for Argentine Social Development (IDESA) states that 30% of the consolidated collection between the nation, provinces and municipalities are explained by taxes that raise production coststhat is, distortive, which are the most urgent to reduce if you want to have a cheap exchange rate.
IDESA focuses on the Tax to check and export withholdings, nationally; Gross income, At the provincial level and the industry and trade rate, which is municipal.
“The Tax Check raised 1.6% of GDP and export rights 1% of GDP. At the provincial level, the tax on Gross income raised 4.2% of GDP and the 0.4%stamps tax. At the municipal level, the industry and commerce rate raised 0.8% of GDP, ”says the study.
“These data show that the main taxes Distortives generate income from the equivalent of 8% of GDP ”, IDESA holds. The report indicates that “this implies almost 30% of the total resources available to the national, provincial and municipal public sector ”.
“It is confirmed that There are no possibilities to eliminate or reduce these distortive taxes without falling back into fiscal deficit ”, Consider the study.
The report considers that VAT is a neutral tax that does not affect the final price and therefore recommends replacing the distortive taxes. Above all, what It is called “Super VAT”which could encompass most provincial taxes.
Cheap and low tax exchange rate
The Tax reduction is in the axis of government discourse, but in turn it is contradictory with the objective of reducing the exchange rate to levels below $ 1,000, Once the fixed change scheme with 1%devaluation is abandoned.
“From the point of view of national production at this level of exchange rate, competitiveness problems intensify. That is, the difficulties they face to export and compete with imported products persist, ”says Idesa’s report.
The study considers that “This conflict of objectives leads to a public policy conflict. ” “On the one hand, business entities ask to lower tax pressure to improve competitiveness. On the other, the government states that the space to lower taxes without compromising fiscal balance is very limited,” says the study.
What says the agreement with the IMF on taxes
The Vector consultant It draws a comparison between the agreement reached by Minister Luis Caputo, and his predecessor Martín Guzmán in 2022 in relation to the issue of the tax system.
“In the fiscal section the agreement reached with the IMF deepens the current government orientation in that matter. Thus, it goes from projecting by 2025 A primary surplus of 1.3% of GDP at 2.2% in 2026 and 2.5% for Triennium 2027-2029 ”, The consultant says.
Vector adds what is “An ambitious and demanding goal considering that the 2022 agreement sought that the primary deficit pass -3% of the GDP at -2.5% in 2022, -1.9% in 2023 and -0.9% in 2024 ”.
“Regarding the reforms required to underpin the demanding intended results, in income matters No substantial differences are observed with respect to the agreement reached in 2022, where the need to create a tax system with greater efficiency and progressivity and lower levels of distortion is indicated, ”says the consultant.
Source: Ambito
